Samantha Ghiotti, Habitto - Build your Venture in Japan (S3E42)

Welcome to the 142nd edition of the eXponential Finance Podcast. Whether you listen to us for the first time, or are a regular, we appreciate your spending time with us.

Habitto is Japan's first connected money experience, helping people save, grow and protect their money.

Habitto became the first company to register as a deposit-taking and electronic financial services intermediary in Japan, using a license type that the FSA made available towards the end of 2021.

Samantha Ghiotti , Co-Founder & Chief Executive Officer, brings over 20 years of unique vantage points and global experience in Technology and Finance to this conversation. Her track record spans banking, investment and insurance across 5 continents, as an investor, entrepreneur and executive. ?

Sam led the Singlife team through its exit in 2021, before launching Habitto, her new business in Japan.

This episode is available on Apple Podcasts, YouTube, Amazon Music, and many other major platforms via our Spotify Podcaster Page.

Key Takeaways:

This conversation offers a fascinating glimpse into the challenges and opportunities of building a financial technology startup in Japan. Here are the key takeaways:

• Navigating the Japanese market requires understanding its unique cultural and regulatory landscape. Japan's intricate financial regulations and consumer behavior, often driven by trust and relationships, differ significantly from other markets.
• Habitto's strategy revolves around building a native Japanese business, understanding the local market and building upon its existing financial landscape. Instead of importing a model from another market, Habitto chose to build a business that resonates with Japanese consumers, focusing on savings products and leveraging existing financial advisor networks.
• Scaling the business in Japan is challenging due to the complex regulatory environment and cultural factors. The strict requirements for fintech licenses and the need to foster trust and relationships with consumers create hurdles for growth.
• Habitto's ability to secure funding, navigate the Japanese market, and build a strong team suggests potential for growth. Their journey, while challenging, exemplifies the potential for fintech success in a market with significant cultural and regulatory complexity.

Japans Unique Context: Regulations & Consumer Behavior

The conversation underlines the distinctive characteristics of the Japanese market that Habitto must address. Japan's financial regulatory environment is complex and rigid, making it difficult for new companies to enter. Securing a license is a lengthy and demanding process, requiring a deep understanding of local regulations.

Beyond regulation, consumer behavior plays a significant role. Japanese consumers value trust and relationships, often preferring to work with established financial advisors. This creates a challenge for new companies like Habitto, as they must build trust and credibility before gaining customer acceptance.

Habitto's Strategic Approach: A Native Japanese Business

Habitto's response to these challenges is rooted in its commitment to building a truly native Japanese business. Rather than replicating a model from another market, the company chose to understand the local market, its cultural nuances, and its regulatory landscape. This deliberate approach aims to establish a business that is both relevant and trusted by Japanese consumers.

Several aspects contribute to Habitto's strategy:

• Focus on savings products: Habitto recognized the importance of savings in the Japanese financial landscape. By focusing on savings products, they cater to consumers' existing financial habits and address their desire for financial security.
• Leveraging financial advisor networks: Habitto recognized the role of trusted advisors in Japan. Providing access to financial advisors allows them to gain access to a wider customer base.
• Building a native Japanese team: Habitto's leadership team includes individuals deeply familiar with the Japanese market. This ensures they can navigate regulatory complexities and understand cultural nuances, contributing to the company's success.

Challenges in Scaling the Business

Despite early success, Habitto faces various challenges in scaling its business. These obstacles are rooted in both regulatory and cultural factors:

• Regulatory limitations: The complexity of the regulatory environment in Japan could restrict company growth. While Habitto successfully navigated some regulations, this limitation could hinder their expansion into new areas of the financial market.
• Building trust and relationships: The Japanese market emphasizes trust and relationships. This makes it difficult for Habitto to gain rapid acceptance and build a loyal customer base. Leveraging financial advisors helps, but building trust remains an ongoing process.
• The need for a robust fintech ecosystem: Japan's fintech ecosystem is still developing compared to other countries, which makes it harder for startups like Habitto to find talent, funding, and partnerships.

Potential for Growth: Navigating Challenges and Capitalizing on Opportunities

Despite these hurdles, Habitto's commitment to building a long-term business and its success in navigating the Japanese market point towards its potential for growth. The company has secured funding and built a strong team capable of adapting to the market's unique challenges.

Several factors contribute to Habito's potential for success:

• A deep understanding of the Japanese market: Habitto's thorough understanding of Japan's nuances gives it a competitive edge.
• A strong focus on customer needs: Habitto's products and services are tailored to address Japanese consumer needs, creating a solid foundation for growth.
• The growing demand for fintech: The global demand for fintech services is rising, including in Japan. As consumers embrace digital solutions, Habitto is well-positioned to capitalize on this trend.

The Road Ahead: Adaptability and Innovation

Habitto's story showcases the complexities of building a fintech business in Japan. It highlights the need for a deep understanding of the market, commitment to building trust, and the ability to navigate complex regulatory environments. Habitto's ability to adapt and overcome these challenges positions them for future success.

The conversation also unveils potential opportunities for Habitto:

• The increasing adoption of digital solutions: Japan is witnessing a growing acceptance of digital services, providing an opportunity for Habitto to expand its reach and impact.
• Growing appetite for investment products: Japanese consumers are increasingly interested in investment products. Habitto can capitalize on this trend by offering relevant and accessible solutions.
• Increased international investor interest: The Japanese market is becoming more attractive to international investors. This presents an opportunity for Habitto to access capital and expand its operations.

Ultimately, Habitto's journey exemplifies the potential of fintech in Japan and highlights the importance of understanding and adapting to this complex and dynamic market.